Understanding ADGM Foundations Regime: A Comprehensive Guide
The Abu Dhabi Global Market (ADGM) collaborates closely with local and international stakeholders, as well as market experts, to cater to market needs. This engagement led to the development of ADGM’s Foundations Regime, designed to address the unique requirements of families and asset owners in Abu Dhabi, the region, and globally.
Meeting the Market Demand
There has been significant demand from Private Banks aiming to offer a full suite of structuring solutions to local and regional clients. ADGM foundations provide a robust platform for wealth management, planning, and preservation. Unlike trusts, foundations are incorporated as legal entities with distinct attributes and legal personalities. This makes them similar to companies but without shareholders, making them ideal for wealth management across generations.
Benefits of the ADGM Foundations Regime
- Access to UAE’s Double Tax Treaties (DTTs): Subject to the UAE Ministry of Finance requirements
- Guardian Oversight: The Guardian supervises the Foundation Council, ensuring it acts in accordance with the foundation’s objectives.
- Legal Flexibility: Foundations can engage in necessary commercial activities and hold assets in their own name.
- Asset Protection Mechanisms: Designed to shield assets from bankruptcy claims, divorce claims, and forced heirship rules.
Setting Up an ADGM Foundation
Establishing an ADGM foundation is efficient and hassle-free, typically taking about 3-5 days once the Registrar receives all required information and documentation. Foundations must have a registered office in ADGM, either independently or through a registered agent.
Encouraging Global Participation
ADGM welcomes local, regional, and international applicants to leverage the Foundations Regime to maintain their wealth, assets, and financials. The regime is anchored by ADGM’s status as an international financial center with an internationally aligned legislative structure and framework.
ADGM Courts' Role
The ADGM Courts have jurisdiction over ADGM Foundations under Article 13 of Abu Dhabi Law No. 4 of 2013. The Foundations Regulations incorporate asset protection mechanisms known as firewall provisions, familiar in common law trust jurisdictions.
Independent Advice
ADGM encourages founders to seek independent legal and taxation advice to ensure their structures meet intended objectives.
Balancing Confidentiality and Transparency
ADGM has split the formation process into public and private elements. Foundation By-Laws remain private and are disclosed to the Registrar upon request. They are shared with governmental authorities only under specific circumstances as prescribed in the ADGM Companies Regulations 2015.
FAQ
Q. What is the ADGM Foundations Regime?
A.The ADGM Foundations Regime is a legal framework designed to meet the unique requirements of families and asset owners. It offers a robust platform for wealth management, planning, and preservation, providing local and international families and High Net Worth Individuals with efficient ways to manage their business and investment interests across generations.
Q. How is an ADGM foundation different from a trust?
A. Unlike trusts, ADGM foundations are incorporated as legal entities with their own distinct attributes and legal personality. This makes them similar to companies but without shareholders, making them suitable for wealth management across generations. Foundations also offer a unique balance of client confidentiality and high standards of transparency.
Q. What are the benefits of establishing an ADGM foundation?
A. ADGM foundations offer several benefits, including robust governance, legal personality, separation of liability, perpetual existence, asset protection, and access to UAE’s Double Tax Treaties (DTTs). They also facilitate migrations from other jurisdictions and provide a flexible and efficient platform for wealth management.
Q. How long does it take to set up an ADGM foundation?
A. Establishing an ADGM foundation is typically efficient and hassle-free, taking about 3-5 days once the Registrar receives all required information and documentation.
Q. What role do the ADGM Courts play in the Foundations Regime?
A.The ADGM Courts have jurisdiction over ADGM Foundations under Article 13 of Abu Dhabi Law No. 4 of 2013. They play a proactive role in incorporating asset protection mechanisms known as firewall provisions, familiar in common law trust jurisdictions.
For more detailed information or to get started with establishing an ADGM foundation, visit Maldbury & Co.